The Public Provident Fund is the darling of all tax saving investments. You invest in it and you get a deduction on your income. Besides, the interest you earn on it is tax-free. Since it is a scheme run by the Government of India, it is also totally safe.
PPF refers to Public Provident Fund and is a Long Term Debt Scheme of the Govt. of India on which regular interest is paid. Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme and can earn a handsome tax-free return on the same which is usually higher than the return offered by Banks on Fixed Deposits.
Page Contents
- 1. Where You can open a PPF Account and How?
- 2. Who can and who cannot not open PPF Account?
- 3. You can have only one PPF account in your name
- 4. PPF Account cannot be opened Jointly with another individual
- 5. Minimum and maximum deposit limit for PPF
- 6. Continuing PPF after the 15 year period
- 7. Deposit date in payment of PPF by Cheque
- 8. Opening a PPF account for a minor
- 9. Loans on PPF Account
- 10. Benefit of Investing in PPF – Taxation of PPF
- 11. Premature withdrawal from PPF
- 12. Pre-mature closure of a PPF account is permissible only in case of death.
- 13. From which account can an NRI invest in the PPF account?
- 14. What happens on maturity of PPF Account of NRI?
- 15. What are the differences and similarities between the National Savings Certificate (NSC) and PPF?
- 16. Only the person actually depositing the PPF amount gets section 80C benefit
- 17. You cannot claim section 80C deductions for any amount deposited by you into PPF account of your parents’ or siblings’ accounts
1. Where You can open a PPF Account and How?
a. To open a PPF account, drop by a State Bank of India branch. SBI’s subsidiary banks can also open accounts. A list of these subsidiary banks is available on the bank’s Web site.You can even visit the nationalised bank in your neighborhood. Selected branches of nationalised banks can also open accounts.The head post office or selection grade sub-post offices also open PPF accounts.
b. You will have to fill up a form. You can take a look or download the form from SBI’s web site. Along with the form, attach a photograph and submit your Permanent Account Number. If you do not have a PAN, then furnish an attested copy of either your ration card, voter’s identity card or passport. When you open an account, you will be given a passbook (just like a bank pass book) in which all subscriptions, interest accrued, withdrawals and loans are recorded.
Image courtesy of Mister GC at FreeDigitalPhotos.net
2. Who can and who cannot not open PPF Account?
a. Who Can Open PPF Account – Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme. HUFs are no more allowed to open any PPF account
b. Who Can Not open PPF Account- NRI’s are not allowed to subscribe to PPF Account. However, if someone opens a PPF Account while he is a Resident of India but subsequently becomes a NRI, he shall be allowed to continue investing in his account. An NRI can invest up to Rs 1,00,000 per financial year in an existing account, that is, an account that he opened prior to becoming an NRI. If someone inadvertently opened an account after becoming an NRI, it is best to close it before it comes to the attention of the concerned authorities in India.
3. You can have only one PPF account in your name
You can have only one PPF account in your name. If, at any point, it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest. What if an Individual have two PPF Account in his/her name?
4. PPF Account cannot be opened Jointly with another individual
4. You cannot open a joint account with another individual. The account can only be opened in one person’s name. You are free to nominate one or more individuals. On the death of the account holder, nominees cannot keep the account going by making contributions. If there are no nominees, the legal heirs get the money. You can open one account for yourself and others for your child/ children. But, on your death, your children cannot make any additional contributions.Regularisation of PPF accounts opened in Joint names
5. Minimum and maximum deposit limit for PPF
A minimum deposit of Rs. 500 must be made during one whole financial year. The maximum that could be deposited is Rs. 1,50,000 in a financial year. The interest you will earn is currently wef 01.01.2018 is 7.60% per annum (compounded yearly). Deposits could be in either one go, or in flexible installments (in multiples of Rs. 100). You could vary the amount and the number of installments, as per your convenience, provided you do not exceed 12 installments in one financial year. Failing to deposit the minimum requirement, would lead to your account being discontinued. Interest would however continue to accrue. You could regularize the account again on paying the prescribed default fee along with subscription arrears.FM Increases PPF Investment Limit in a year to Rs. 1.50 Lakh
6. Continuing PPF after the 15 year period
The PPF account is valid for 15 years. The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account. Once your account expires, you can open a new one. The only limitation is that you cannot withdraw it until seven years are completed, after which 50% of your deposits can be withdrawn, if needed.How to extend PPF account beyond 15 years
PPF account holders have an option of extending their accounts after the 15 year tenure with or without further subscription, for any period in a block of 5 years. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed. In case the account is extended without contribution, any amount can be withdrawn without restrictions. However, only one withdrawal is allowed per year.
If you continue the account after 15 years, with continued deposit, withdrawal up to 60 per cent of the balance at the beginning of each extended period (block of five years) is permitted.
7. Deposit date in payment of PPF by Cheque
In case of PPF account money deposited by means of a cheque or demand draft, the date of encashment / Realisation of the cheque or demand draft will be treated as the date of deposit. This issue becomes particularly relevant in respect of deposits made towards the end of the financial year by cheque / demand draft because if the same is not realised by March 31, then the same will be treated as deposits for the following financial year. This would also have ramifications in respect of the tax deduction being claimed by the individuals in a particular tax year. PPF Circular clarifying regarding reckoning of date of deposit
8. Opening a PPF account for a minor
Under PPF scheme, an individual may on his own behalf or on behalf of a minor of whom he is a guardian, open a PPF account. Further, either father or mother can open PPF account on behalf of his / her minor child, but both cannot open the account for same child. Instructions on opening of account for minor
9. Loans on PPF Account
Loans can be availed from the 3rd financial year excluding the year of deposit. Amount of such loans must not exceed 25 percent of the amount that stood to the account holder’s credit at the end of the second year immediately preceding the year in which the loan is applied for.
A fresh loan is not allowed when a previous loan or interest is outstanding. Interest is charged at a rate of 2% if repaid within 36 months and at 6% on the outstanding loan after 36 months. The repayment may be made either in lump-sum or in Installments.
10. Benefit of Investing in PPF – Taxation of PPF
a. Benefit u/s 80C – The Investments made in PPF Account are eligible for deduction u/s 80C
b. Tax Free Interest – No Tax is payable on the Interest Earned on PPF Account.
11. Premature withdrawal from PPF
The entire amount in your account could be withdrawn only on maturity. However, in times of financial crises partial withdrawals are permitted subject to certain ceiling limits. You could withdraw once a year, from the 7th year onwards. Such withdrawals, must not exceed, 50% of the balance at the end of the fourth year, or 50% of the balance at the end of the immediate preceding year, whichever is lower.Tax effect in case of premature closure of PPF Account
12. Pre-mature closure of a PPF account is permissible only in case of death.
The Interest Rate of PPF is decided by the Govt. The Current Interest Rate on PPF is 7.60%. The Interest is computed for a calendar month on the basis of the lowest balance in an account between the close of the 5th day and the end of the month and the Interest is credited to the account of the account holder at the end of the year.
13. From which account can an NRI invest in the PPF account?
An NRI can use funds in the NRE account or the NRO account to make investments in the PPF account. It is important to remember that the PPF rules require you to invest at least Rs 500 per financial year in the PPF account. If you fail to make the minimum investment in a year or years your account will be considered dormant. Subsequently, when you want to revive the account, you would need to invest Rs 500 for each year that you missed plus pay up a penalty of Rs 50.
14. What happens on maturity of PPF Account of NRI?
If you are an NRI at the time the deposit matures, you would need to withdraw the balance. An NRI is not eligible for extension on the PPF account. What happens if you leave the account unattended past the maturity date? “In such cases the account will be considered ‘extended without contribution’ in blocks of 5 years for an unlimited period of time. Extended without contribution means that the NRI will not have to make the minimum yearly investment of Rs 500. His account will continue to earn interest at the prevailing rate. According to the PPF deposit rules the extension can be made for an unlimited period of time.
15. What are the differences and similarities between the National Savings Certificate (NSC) and PPF?
| National Savings Certificate (NSC) | Public Provident Fund (PPF) |
| Interest Rate: 7.60 %, compounded annually but payable on maturity(wef 01.01.2018) | Interest Paid: 7.60 %,(wef 01.01.2018)compounded annually |
| No monthly/yearly payments | No monthly/yearly payments |
| Minimum investment: Rs 100 and in multiple of Rs 100/-
Maximum investment: No Limit |
Minimum investment: Rs 500 (required annually)Maximum investment: Rs 1,50,000 |
| Duration of investment: 5 years for NSC VIII Issue | Duration of investment: 15 years |
| Can be used as a security for mortgage and other purposes | Cannot be used for such purposes |
| Tax benefit under Section 80 ‘C’ available.Maximum limit: Rs 150,000 | Tax benefit under Section 80 ‘C’ available.Maximum limit: Rs 1,50,000 |
| Good medium-term investment option | Good long-term investment option |
| Interest accrues annually is taxable under Income From Other Source and is deemed to be reinvested and therefore allowed as deduction u/s 80C | Interest is fully Exempt |
Do consider opening a PPF account if you do not have one. You can put in as little as Rs 500 a year to keep it going.
16. Only the person actually depositing the PPF amount gets section 80C benefit
This means if your spouse deposits any amount into your PPF account, you will not be able to claim the deduction benefits under section 80C. Infact, your spouse will be able to (rightfully) claim section 80C deductions on his/her income.
17. You cannot claim section 80C deductions for any amount deposited by you into PPF account of your parents’ or siblings’ accounts
While tax laws allow you to claim 80C tax benefits for deposits into your spouses account, the same rule does not apply to your parents, siblings or relatives.
(Republished with amendments)
Author Bio
Tax guru;
can i open ppf account in name of my self and in name of my minor children(two in no)? In this case Can I deposit maximum limit( supposed to be 1 lakh from dec 2011) to each account( Mine account and my other two children account)? can I get the interest on all three account? Will that interest will be free from any tax on maturity?
Tax guru;
can i open ppf account in name of my self and in name of my minor children(two in no)? In this case Can I deposit maximum limit( supposed to be 1 lakh from dec 2011) to each account( Mine account and my other two children account)? can I get the interest on all three account? Will that interest will be free from any tax on maturity?
Dear Tax Guru,
I have a PPF account in my name and have deposited Rs70,000/- for year 2011-12. Can I open another PPF account (as guardian) under my daughter’s (minor) name and deposit another 70,000/- in this PPF account?
Will I be earning interest on both (mine and my daughter’s – minor) these PPF accounts?
Regards,
Vikas M
sir/madam
if i deposited Rs 500/- per month then can u tell me how much amount i get after 15 years.
urgent revert back
Is interest in PPF account of HUF taxable?
Sir,
If I Invest 5000 Rs. In PPF I will got 1759497 Rs. after 15 years.but when I invest same amount on LIC Jeevan saral 5000 Rs. per month for 15 years I will got 2221984 Rs. The diffrence amount is 462487 Rs. so i want what are the benefits of investing in PPF. and which is better option for investing?
Vinay Gupta
Sir,India govt taken better action for tax saver.
what are the procedures to start ppf account and pls tell me benifits suppose 500 per month i invest…
SIR, IF I INVEST 70,000.00 PA IN PPF FOR 15 YRS WHICH WILL BE 10,50,000.00 RETURN I WILL BE GETTING APPX. 17,50,000.00. AND IF INVEST 10,50,000 FOR 10 YEARS IN IDBI BANK FD @ 9.50% I WOULD BE GETTING MUCH MORE HIGHER RETURN. THEN CAN U PLS EXPLAIN ME WHY ONE SHOULD GO FOR PPF ?
Recent news paper statement the PPF limit in the bank is increased from 70, 000 to 1 laksh (One Lakh). Are you following or not, if not when it will be implimented. Kindly intimate as early as possible.
i am interested to open a new account PPF.
Sir,
I want to open a PPF account in the name of my daughter who is 9 years old. I approached the SBI Aundh, Pune branch. Along with other documents, I had submitted my PAN card copy. However, they are insisting me to submit the PAN card of my daughter who is a minor (Minor PAN Card). If I submit the PAN card of my daughter, will i get the income tax benefit. Is it necessary to submit the PAN card of my daughter. Please guide me.
R/Sir,
I got a massage fron news that we can deposits upto Rs 100000/= in my PPF a/c.
I would like to know that from which month we can deposits Rs. 100000/= (one lac.)
With regards.
M.Thakur
Sir,
I started investing in PPF since january 2011 in the following installments,
7 months x 5000 = 35000
5 months x 7000 = 35000
so total of 70000, while opening account in SBI i declared it as monthly investment of 5000,but later on i increased it to 70K/anum, i have one doubt, on this amount i get same annual interest OR will i get more if i invest more amount at the beginning of year say suppose 70000 at a time?
kindly reply,
rgds,
pavan
Recent news paper statement the PPF limit in the bank is increased from 70, 000 to 1 laksh (One Lakh). Are you following or not, if not when it will be implimented. Kindly intimate as early as possible.
Recent news paper statement i.e. gazzet equal, statting that the PPF limit in the bank is increased from 70, 000 to 1 laksh (One Lakh). Are you following or not, if not when it will be implimented. Kindly intimate as early as possible.
(DR. R.S.R. Anjaneyulu)
BHEL R&D Branch
Account Holder. A.c No.10202156488 *Saving.
I have one query, that ppf account in my name, can i deposit the amount in my account from my income.
sttatment
a/c.PPF.56088151985
PLZ….STATMENT
I have one query, that my wife have a ppf account in her name, can i deposit the amount in her account from my income & take the benifet of section 80 c for my income tax return.
sameer gupta
sir, suppose if i pay yearly Rs12000/ after 15 what will be the maturity amount
Hai Sir,
I just wanted to know the maximum limit that can be deposited in a financial year in PPF a/c. It is mentioned in your article that it is 70,000/=. But I heard that the limit is raised to 1,00,000/= from this financial year, is it true?
Pl. refer to the discussion on PPF account in minor’s name appeared in the ‘ The Hindu’dt 26/11/2011, under the heading ‘tax forum- questions and answers’. It is referred to in the question that as per clarification dt march 29 2010 of RBI, the deposits made in the names of 2 minors (rs. 70,000 + 70,000) were refunded to the major account holder, as the total contribution has exceeded the limit of rs. 70000 made by the major account holder himself.
But in para 8 of “features of PPF scheme”, you have mentioned that rs. 70,000 can be remitted in the name of the individual and another rs.70000 in the name of the minor, but limiting the income tax benefit to the maximum of rs.100000 under 80c. This explaination is contradictory to RBI’s clarification dt 29th march 2010.
Kindly explain the correct position, as it stands now and also mail a copy of RBI’s clarification
My father(sr.citizen) have PPF a/c. since year 2000 and me as Nominee.
My father’s HUF also have ppf a/c. and me as Nominee.
He is expired a couple of months ago. What do i need to claim these account’s proceeds? Is it advisable to transfer these proceeds in my ppf a/c? or in sb ac?
would it earn same exempted interest if the transfer is done in my ppf a/c?
I and my children also have ppf a/c in the same bank since 2000.
The ac were opened when they were minors, now they are majors do we need to intimate bank to make change from minor to major? or they do automatically?
Do major children get same tax benefit on the interest earned on their balance in ppf?
-Mehta
Sir,
I am in my last year of my PPF a/c. If i withdarw Total Amount from my PPF account Will i get interest that is to be accrued till date.?
Dear Sir,
My son’s ppf account is already due, however he lives abroad and has no intentions of coming to India. He does not have any pan card or bank accounts in India. I am a senior citizen and would like to know how I can close his account. His account does not have a nominee either.
Please note that it was I who kept the account running all these yeara. My son does not support me financially.
Hi All,
Please help me out in this:-
Can i change my name in PPF account.
If yes please tell me the procedure of the same
can one month old baby open PPF Account?
I want to deposit an amount of Rs.5000/- in PPF account during 2011-12. During 2012-13, I want deposit Rs.20000/-. During 2013-14, I want to deposit Rs.10000/- Can I do so or I have to deposit equal amount in each of the year throughout 15 years period.
suppose I am liable for payment of income tax of Rs.10000/- during the financial year 2010-11. Instead of paying tax, I wanted to deposit Rs10000/- in Public Provident Fund. My query is, can I do so and get exemption from payment of Income Tax of Rs.10000/- for the financial year 2010-11.
suppose I am liable for payment of income tax of Rs.10000/- during the financial year 2010-11. Instead of paying tax, I wanted to deposit Rs10000/- in Public Provident Fund. My query is, can I do so and get exemption from payment of Income Tax of Rs.10000/- fot year 2011-11.
A PPF ACCOUNT HAS BEEN OPENED IN HUF NAME IN 2006. NOW BANK OBJECTS AND CLOSED WITHOUTNINTEREST. INTEREST IS LOST. CAN I CHANGE TO PERSONAL NAME.
Can a nominee continue the PPF account without any further deposits after the death of the subscriber? Will such an account continue to earn interest till final claim and closure? Is there any time limit for nominee to close the account and make the claim?
My PPF is maturing on March 2012. I have taken a loan in June 2011 and I require funds urgently can I apply for one more loan.
i have a PPF acount in my name, can i open account in my sons name (who is minor) with me as guardian, pl advice
is it better to deposit PPF amounts as monthly installments? or all at one go-in big sums? And pls let me know if depositing before certain date is better for interest calculation. When does interest get credited?
Dear Sir,
i have opened PPF A/C threw IDBI bank. It does not provide online view facility such as SBI. can I transfer my PPF A/C from IDBI to MY SBI account.
How many times can i renew a PPF account in a block of 5 years after expiry of its 15 years?
I have a PPF Account in SBI , Can I renew the same as the last date of transaction was on 28/12/2008
Dear Sir,
I have an account with PPF from last 10 years. Every Year I am depositing apx 40,000 to 60,000 in my PPF account. Now I have opened an account with my child name as Minor & Natuarl Guardian. Can I get Interest on both the accounts ? Pl advise.
Dear Sir,
Can I invest in names on my minor children form the funds of my HUF?? What would be the implications u/s. 80C of the Income Tax Act.
Hi,
What is the difference between opening a PPF A/C in SBI branch and in a post office? Which provides better service if we encounter problems like transfer, closure, etc. In my opinion none of the government offices provides good service to its customers.
Rgds,
Uma
Dear Sir,
I was associated with one NGO. As per an Appointment Letter, they are suppose to open PPf Account and contribute towards it. They are actually cutting the PPF amount from my salary, but they have not published my PPF account no. Can you help me how can i cliam this amount. If possible can you please provide me details of person whom i can contact.
If this NGO is fraudulent then what can be my next plan of action.
Sir
I want to know that I have invested some amt. in PPF last year and I got Rs 1000 as interest. Do I need to show that interest as source of other income in my ITR-1 i.ereturn filling form.
Dear Sir,
I would like to know, if i have deposited 70000 at once in my PPF account at SBI in the month of Jan 2010, will i be entitled to get full 8% interest on the year of 2010-2011 at April 2011.
regards,
abidali
If I need not required any income tax benefit than how much amount can be deposited in PPF A/C in a financial year. Can I deposit more than 70000/- and get the interest amount as per PPF A/C.
Pl clarify.
Regards
Chahdan
Sir, I would like to ask what is the Policy Number in case of an SBI PPF account?
Sir,
I have opend a PPF A/C in Post Office in 1994. Now I want to withdraw my deposited amount. How much amount I will get this month i.e. July, 2011.
Thanks\
Anita
Dear Sir, I am a pensioner and income tax payee. Can I open a PPF account in the name of my grand daughter and have its benefit towards income tax? My son is also income tax payee and does not have ppf account in the name of his daughter in whose name I want to open the account.
Dear Sir, I am a pesioner and have taxable income. Can open a PPF account in the name of my grand daughter and have its beefit towards income tax? My son is also an icome tax payee and has no PPF account in the name of his daughter in whose name I want to open the ccount.
i have take PPF in the name of spouse ,can i get deduction under sectin 80c?